Record levels of renewable energy capacity were added across the world in 2016 but the falling costs of green power equipment led to a 23% decline in money spent on investments, UN-backed research showed on April 6.
Wind, solar and other renewables capacity totalling 138.5 gigawatts (GW) was added to global power generation capacity last year, 8% more than in 2015, a Frankfurt School of Finance report said.
But investments to achieve this totalled US$241.6bil (RM1.07tril), compared with US$312.2bil (RM1.39tril) in the previous year, mainly due to falling equipment costs as technologies mature, and economies of scale.
“There is no let-up in the clean energy investment drive,” Ulf Moslener, professor for sustainable energy finance at the school and one of the report’s authors, told reporters.
“Investors received more capacity for less money.”
The average capital expenditure for solar photovoltaics and wind dropped by over 10% year-on-year and the unit cost of producing power from onshore wind turbines dropped by 15% and that from turbines offshore by 25%.
“Wind and solar energy have arrived at costs that would have seemed inconceivably low a few years ago,” Moslener said.
Investment in new renewables capacity, which avoids emitting carbon dioxide when being operated, was roughly double that in fossil fuel generation, he also noted.
Investors were keen to build new installations, or acquire existing ones, borne out by acquisition activity rising by 17% to a record US$110.3bil (RM489.35bil).
But a dent in the positive trends comes from the still small proportion of electricity actually being derived from weather-dependent renewables.
Excluding large hydro projects for their questionable environmental role, it rose to just 11.3% of world power generation, up from 10.3% a year earlier.
The lower investment sum, apart from the better cost effectiveness per dollar spent, also resulted from a slowdown in China, Japan and other emerging markets, mainly due to slower than expected growth in demand for power.
China broke an 11-year rising trend, seeing investments drop by 32% to US$78.3bil (RM347.38bil), Japan’s slumped by 56% to US$14.4bil (RM63.89bil) and those in the United States slipped by 10% to US$64.4bil (RM285.71bil) as developers lengthened construction periods to benefit from a five-year extension of tax credits.
Europe saw a 3% rise to US$59.8bil (RM265.3bil), led by Britain and Germany.
The report was prepared by the Frankfurt School-United Nations Environment Programme (UNEP) Collaborating Centre and Bloomberg New Energy Finance. — Reuters